Conclusion and Policy Implications

Since the passage of the Affordable Care Act in 2010, the nation has experienced gains in coverage, as well as improvements on key indicators of access and medical bill problems.¹⁵ These improvements reflect coverage gains — fewer people are exposed to the full cost of health care — as well as more comprehensive health plans with greater cost protection. This is especially true for low-income people covered by Medicaid and marketplace plans. But, as this analysis shows, the United States has not eliminated cost-related barriers to timely health care or protected people from medical debt. While these problems continue to be most apparent in the individual insurance market, they are increasing in the employer group market. Even public insurance programs like Medicare, which covers seniors and disabled people under age 65, leave many struggling to pay for health care.¹⁶

The latest Republican-led effort to repeal and replace the Affordable Care Act would have significantly increased the cost of health care for many Americans. After that effort failed in September, the Trump administration took two major actions in October, which could also have the effect of increasing costs. The first was an executive order to federal agencies to write new regulations that would allow the sale of insurance products that skirt the ACA’s consumer protections and cost-sharing standards.¹⁷ In the second action, the administration ended the federal payments for the ACA’s cost-sharing reductions.¹⁸ At the other end of the political spectrum, Senator Bernie Sanders has introduced legislation that would phase out the ACA and eliminate most cost-sharing in a Medicare-for-All framework. Seeking middle ground, Senators Lamar Alexander and Patty Murray held hearings on stabilizing the marketplaces in September, which included an appropriation for the cost-sharing reductions. To reduce the number of underinsured people in our health system, we also suggest the following policy options:

For people in individual market and marketplace plans

• Increase the cost coverage of health plans. The law’s cost-sharing reductions (CSRs) increase the actuarial value (the percentage of medical costs covered on average by a health plan) of the marketplace’s silver level plans from 70 percent to as high as 94 percent for people with incomes under 250 percent of poverty ($30,150 for an individual and $61,500 for a family of four). The Commonwealth Fund has found that these reductions have been effective in lowering deductibles for those eligible to levels in employer plans.¹⁹ To counteract the administration’s executive order, Congress can immediately reinstate the cost-sharing reduction payments by making an appropriation. Since the Congressional Budget Office (CBO) has already assumed the cost of the CSRs in the federal budget baseline, the appropriation is a formality: it would not increase the federal deficit. To make health care more affordable for middle-class families, Congress could then consider extending the CSRs higher up the income distribution.
• Increase the number of services excluded from the deductible. Most plans sold in the individual market nationwide exclude certain services from the deductible, such as primary care visits and certain prescriptions.²⁰ In 2016, the U.S. Department of Health and Human Services (HHS) provided a standardized plan option for insurers that excluded eight services from the deductible at the silver and gold level. These include primary and specialty care visits, urgent care visits, mental health and substance-use disorder outpatient visits, and all prescription drugs. HHS or Congress could make these exceptions mandatory for all plans. Covered California, the California marketplace, requires all health plans sold in the marketplace to exclude all physician visits and outpatient services from the deductible.
• Simplify the metal tiers and increase premium tax credits. As an alternative to extending cost-sharing reductions to people above 250 percent of poverty, Congress could lower the number of metal tiers in the individual market from four to two at higher actuarial values. For example, insurers could be required to sell just gold and platinum plans, which have actuarial values of 87 percent and 94 percent and much lower deductibles and copayments than silver and bronze plans. Tax credits would adjust to reflect the plans’ higher premium costs. This avoids the circuitous route of covering insurers’ costs through the cost-sharing reductions. Premium tax credits could be increased and extended to people earning more than 400 percent of poverty.²¹

For people in employer plans

• Set a standard actuarial value for employer plans. Currently under the ACA, people in employer plans may become eligible for marketplace tax credits if the actuarial value of their plan is less than 60 percent. Congress could increase this level to 70 percent (the level of silver plans) or higher.
• Set standards for deductible exclusions in employer plans. Most employer plans exclude at least some services from their deductibles.²² Congress could set a minimum set of exclusions that could resemble the current standard plan option for the marketplaces.

Addressing the Key Driver of Insurance Costs: Health Care Cost Growth

Health care costs are the single largest factor in the growth of private insurance premiums in the United States. Insurers and employers have tried to manage premium growth by making consumers increasingly responsible through higher deductibles and other cost-sharing vehicles. Advocates of this approach argue that with more skin in the game, consumers will help to slow cost growth by choosing more-efficient providers and being more selective in the services they use. But years of experience with high-deductible health plans in the U.S. has yielded scant evidence that such a strategy is effective. Instead, as the survey findings indicate, many consumers have responded to higher deductibles by avoiding needed health care and skipping their medications.

Innovations under way in the delivery system, some of which stem from the ACA, have helped slow the rate of growth in health care costs in the past few years. But moving the nation closer to the performance of other countries on both cost and health outcomes will require considerably more work.²³ While targeted consumer cost-sharing may help to reduce use of low-value health services, this approach is unlikely to be successful unless consumers are better informed on prices and the value of alternative approaches to their health care problems. Such information is largely unavailable. Evidence suggests that consumers cannot do the heavy lifting required to reduce the rate of growth in medical costs in the United States.